July 2012
29 posts
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Leverage
You’ve seen us post recently about successful trades, and we navigated earnings season pretty well. One of the reasons we’re able to get into and out of lots of positions is because we use leverage they way it’s intended to be used. We’ll explain.
Many people think of “leverage” as a dirty word - the thing that cause the financial meltdown, or maybe causes...
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AMZN, SBUX, & FB Earnings Trades Follow Up
Here’s the follow up we sent to Earnings Trade Alert subscribers this morning. Subscribe today and get in on the action!
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We had one nice win, one fail, and one in the middle. Let’s roll though them.
AMZN stayed in the Iron Condor max profit range...
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AMZN, SBUX, and FB, oh my!
We have never post the trades we shared with paying Earnings Alerts members on the blog before the close, but we are making an exception today. Why? Two reasons; FB is reporting for the first time and we’re in a good mood from winning earnings trades in GOOG, BIDU, and LVS. So without further ado, here you...
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BIDU: Patting Ourselves on the Back
If you’re signed up for our earnings alerts you’ve already gotten the report on our BIDU call spread: the 105/110 using the current July weekly options. We got in at $2.70 and out at $4.75, which is about a 75% profit. This isn’t about boasting, though - we think this is an excellent teaching opportunity and didn’t want to limit it to only those fortunate souls who have...
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AAPL Earnings: A Quarterly Tradition
Apple, Inc. posts earnings today after the market close, in what is likely to be the most heavily-watched release this quarter. As of right now, AAPL is down about half a percent at $601, and it seems likely to stay around there until the close. Weekly options are trading at 65% implied volatility, compared to 36% for August options, and the move implied by the current ATM/OTM options is around...
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Implied Volatility & Earnings
One thing you’ll notice about earnings season is that trading volume increases across the market. With more people willing to place bets on expected moves, options come into higher demand, which raises options prices on average and creates a spike in implied volatility. In general, the less time to expiration there is, the higher implied volatility is, particularly for out-of-the-money...
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Earnings Season - Turn Up The Volume!
It’s earnings season - probably the most exciting time you’ll have as a trader. Every three months you get increased volatility, heavier trading, and an endless cycle of news articles telling you what’s going where, when, and why. The usual equities are popular, and upstart companies, recent IPOs, and popular tech stocks run away with attention. This is our favorite season - just...
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Get a Move On
It’s earnings season, so we’re going to spend some time breaking down fundamental aspects of earnings trading strategies and approaches. Today we’ve already talked about Iron Condor trading around earnings announcements - you can read about that here.
Do you know how to calculate the “expected move” in a stock’s price after its earnings announcement? It turns...
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To Soar or Not To Soar? Iron Condors Into...
Iron Condors are a great Options strategy, especially in a high volatility market environment. But are they the right strategy for an earnings based trade?
That depends on several factors. The most important is, of course, liquidity. An Iron Condor is a four-legged spread, and therefore has a tendency to have a wide spread between the mid price and natural (nat) price. This results in...
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Making a Checklist
If your trader friends were to ask you, “Why did you make that trade” or “Why did you get into that position”, would you have a good answer? When you’re trading stock it’s usually a pretty easy one - something like “I feel good about their earnings” or “I think their P/E is low compared to their industry average”. But if you’re an...
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Selling Puts
If you’ve traded options before, chances are that you’ve sold covered calls against stock that you own (or perhaps bought as part of the transaction). But what if you don’t own the stock? You could try to sell naked calls, but that’s an expensive and much riskier trade that isn’t right unless you’re an experienced options trader. So what do you do if you’d...
